eSports in France
A new legal framework
On 7 October 2016, a new law called the “Digital Republic Act” was enacted in France.
Among other things, the Digital Republic Act (DRA) creates a specific legal framework for competitive video gaming, or ‘eSports’. Video games publishers, eSports businesses and gamers alike should welcome this law, as it clarifies the legal status of eSports in France which was previously ambiguous.
eSports competitions involving the physical presence of the competitors are no longer illegal
Before the DRA was passed, fee-based eSports competitions fell within the scope of prohibited sweepstakes. The French Internal Security Code provides for a general ban on sweepstakes in which the following four criteria are met: (i) the sweepstake is accessible to the public; (ii) it creates the potential for profit; (iii) it is, even partially, based on chance (which includes skill games as an element of chance is presumed in these as well); and (iv) it requires a financial contribution from the participants (which is interpreted broadly).
Under the DRA, eSports competitions involving the physical presence of the competitors will not constitute illegal sweepstakes, provided the participation costs do not exceed a specified percentage of the total organisation cost including the total amount of the offered prizes and rewards. The relevant percentage will be specified by decree.
Some online eSports competitions (including qualifying rounds) remain illegal if they require a financial contribution by gamers other than the internet connection and video game licence fees. It is also worth noting that this new legal framework does not apply to bets, whether they happen within eSports competitions or fee-based fantasy games.
The DRA specifies that competitions must be notified in advance (although the detail around this requirement is yet to be determined), so that their legal compliance can be checked. In addition, a decree will determine the maximum amount of the prizes and rewards that can be offered during a competition. Offering prize pools exceeding this statutory limit will lead to the eSports organisation having to demonstrate that prizes and rewards are entirely redistributed. The details around redistribution mechanisms will be specified by decree.
These provisions are in line with the key legislative objectives in terms of regulating gambling activities: transparency and integrity of gambling operations, tackling money laundering and the protection of minors.
Minors can compete in eSports competitions
Under French law, the decision to let a minor play a video game is left to his/her legal representative, based on the information provided to him/her in accordance with applicable law. Accordingly, the DRA provides that minors can participate in eSports competitions, provided – among other requirements – that the eSports organisation has obtained the consent of the minor’s legal representative. Consent will only be valid where the legal representative is informed prior to giving consent of the financial stakes involved in the competition, as well as of the games that will be played during the competition, including their PEGI rating.
Specific restrictions apply to minors under the age of 16 when they are employed as professional gamers; the minor has to obtain prior authorisation to work from the relevant administrative authority and any earnings need to be deposited and held in a designated account until the minor reaches 18.
A new legal status is created for eSports organisations and the professional gamers they employ
According to a report delivered to the French Parliament, most professional gamers are self-employed and are thus disadvantaged by having a precarious status. On the other hand, because of the absence of an employer-employee relationship, eSports organisations lack the hierarchical power to impose training sessions or participation in specific competitions on their gamers (“E-sport or competitive video gaming”, Interim Report by Rudy Salles MP and Jérôme Durain MP, March 2016).
Under the DRA, all professional gamers are now subject to the French Labour Code and have to enter into written employment contracts for a fixed-term with eSports businesses. The term of such employment contracts will depend on the video game seasons (the start and end dates of which should be determined by regulation), but shall not exceed five years. Failure to comply with the employment provisions in the DRA will result in the contract being recognised as a contract of employment of indefinite duration, with financial consequences for the employer.
In order to be able to employ professional gamers eSports organisations will be required to obtain authorisation from the Minister for the Digital Sector. Throughout the duration of the contracts, they will also have to ensure that all their employed gamers are offered the same preparation and training conditions.